Tax measure delayed in House

By BRANDI GRISSOMAssociated Press Writer

AUSTIN (AP) - Gov. Rick Perry's tax reform plan took another hit Wednesday.

After about 90 minutes of debate, the House sent back to committee a measure sponsored by Lubbock Republican Rep. Carl Isett that would cap at 3 percent the amount of growth in local tax revenue cities and counties can take in each year without taxpayer approval.

The proposal, a major part of Perry's plan, was sent back to committee because of a technical error. A version aimed to pacify city and county officials who ardently oppose the bill could return to the floor for more debate as soon as next week.

It is the second attempt by House members to provide property tax relief Perry has been promising for more than a year. On Tuesday, Rep. Dwayne Bohac, R-Houston, failed to get the 100 votes needed for his bill, which sought a constitutional amendment to halve the amount property tax appraisals can grow each year. Currently, tax appraisals can grow as much as 10 percent annually.

Isett said his “truth in taxation” bill would provide transparency for Texas taxpayers and protect a planned one-third cut in property taxes.

Staff members from the governor's office have been working with Isett for weeks to get the 76 House member votes needed to pass the bill Perry touted in his State of the State Address. The action Wednesday was a temporary setback, said Perry spokeswoman Kathy Walt.

Critics say a revenue cap would be devastating for fast growing and rural areas, limiting the ability of local officials to generate money for services.

As with the appraisal cap legislation, the Texas Municipal League and the Texas Association of Counties oppose reducing the revenue cap.

“To cap us at 3 percent or 5 percent eventually will cause a deterioration of county government and government services as we know it at the local level,” said Mickey West, county association president and Palo Pinto County judge.

Rep. Fred Hill, R-Richardson, an outspoken opponent of the failed appraisal cap measure, said the revenue cap doesn't account for the unique needs of the more than 1,200 Texas cities.

But Isett said the bill allows local governments to raise as much money as they need and only requires those officials to seek approval from taxpayers.

Current law requires local taxing entities to publish notices and hold hearings when tax revenue grows by more than 3 percent. City and county tax revenue can increase as much as 8 percent before a rollback election to reduce the tax rate. A petition with signatures from 10 percent of local voters is required for an election.

Isett's bill calls for notification and public hearings on any tax increases, lowers the revenue cap from 8 percent to 3 percent and does away with the petition requirement for a rollback election. The bill only applies to entities that bring in more than $5 million annually in taxes, excluding school districts. It also does not consider revenue from new property to determine the percentage of increase that would trigger a rollback election.

A major point of contention for the bill's opponents is the automatic election if local revenue grows more than 3 percent. They say it would be too expensive for local governments and could be unnecessary in many cases.

A change to the plan approved by House members on a vote of 73-72 requires signatures from 10 percent of voters in a jurisdiction before a rollback election.

Supporters said that requirement is too onerous for taxpayers unhappy with high rates, and Isett said the change will not likely be included in the bill when it returns to the floor.

Isett said he will compromise by allowing a graduated petition requirement calling for signatures from 10 percent of voters in the previous gubernatorial election.

Walt wouldn't comment on specific measures to change the revenue cap plan but said Perry will work with Isett to pass a bill that protects taxpayers.

“There should be no doubt in anyone's mind that Gov. Rick Perry is fully in the corner with taxpayers on this,” Walt said.